Facebook Inc.'s Social Commerce Lead Is Untouchable

Facebook began testing a buy button last summer. Source: Facebook.

The push toward social commerce is well underway. All the major social networks -- Facebook , Instagram, Twitter,and Pinterest -- have introduced new features this year designed to sell more goods. While none has plans to take a commission from sales made through their social networks, they all plan to increase the amount advertisers are willing to pay per ad.

Despite all the recent activity around social commerce, Facebook still holds a huge edge in the number of leads it generates and the amount of sales it produces. That's largely due to the social platform's giant reach, which is about five times its next closest competitor, but Facebook still punches above its heavyweight class when it comes to producing online sales.

Its closest competitor isn't even closeFacebook's closest competitor in social commerce is definitely Pinterest. The social network specializes in shopping intent by creating a space for users to collect ideas and items they're interested in seeing again. As a result, Pinterest accounts for 0.16% of all mobile e-commerce traffic in the U.S., according to a study from Business Insider.

Comparatively, Facebook accounts for 1.32%, or eight times as much traffic. But if you look at total users, Facebook has only about four times as many. Pinterest is expected to reach 47.1 million active users in the United States this year. As of its most recent quarterly report, Facebook had 213 million active users across the U.S. and Canada.

Facebook is producing twice as much e-commerce traffic per U.S. user as Pinterest. What's more, Facebook's traffic is converting at a better rate than competitors. While Facebook accounts for 50% of social commerce traffic, it's responsible for 64% of sales.

Why is social commerce important?More and more online stores are turning to social media to advertise their products. Social media's share of e-commerce referrals tripled year over year during the first quarter of 2015. And with all the new features delivered this year, that number should continue increasing. The platform that can convert the most traffic into purchasers will ultimately gain the biggest piece of this growing pie.

Right now, that appears to be Facebook, and it doesn't seem to be giving up ground. The social network expanded its buy-button test to over 100,000 advertisers in June. It also started experimenting with allowing certain businesses to open a "storefront" on their pages, displaying a collection of items to users.

The company has also been making advances in e-commerce with its secondary apps. Instagram is set to start displaying a "shop now" button on sponsored posts. Meanwhile, the company is wooing businesses to establish a larger presence on Messenger, and it's reportedly working on a concierge service within Messenger codenamed "Moneypenny." The company also introduced peer-to-peer payments within Messenger.

Twitter and Pinterest aren't standing idly by, however. The former introduced its buy button last year and is working to expand it to more advertisers. The company also introduced "collections" earlier this year, which allow brands and celebrities to curate a list of products for followers to shop. Pinterest, meanwhile, introduced buyable pins, which allow users to buy products directly through Pinterest.

But both lack the scale and budget to test new features as quickly and effectively as Facebook. As a result, the biggest social network will always be one step ahead of the smaller companies when it comes to social commerce. What's more, Facebook has the revamped Atlas demand-side ad platform, which allows businesses to track ad efficacy across devices and even in stores. It's aided by Facebook's real ID policy.

With spending on social-commerce ads continuing to increase, Facebook is poised to see continued growth in its price per ad as it improves its social-commerce features.

The article Facebook Inc.'s Social Commerce Lead Is Untouchable originally appeared on Fool.com.

Adam Levy has no position in any stocks mentioned. The Motley Fool owns and recommends FB and TWTR. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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